This website uses cookies in order to enhance your experience. Please review our Privacy Policy to learn how we may use cookies and how you can change your browser settings to disable cookies. By continuing to use this website without changing your settings, you consent to our use of cookies.

"Your kids and grandkids are going to fly on spacecraft that had their beginnings in what we’re doing right now.”

The New York Times may have reported that Elon Musk is prepared to send people to Mars “with or without NASA,” but the CEO of Space Exploration Technologies Corporation—better known as SpaceX—was singing a different tune on Tuesday after his company launched its Dragon spacecraft into low Earth orbit and began guiding it towards the International Space Station.

“I would like to start off by saying what a tremendous honor it has been to work with NASA. And to acknowledge the fact that we could not have started SpaceX, nor could we have reached this point without the help of NASA,” Musk said at a press conference after the launch.

If all goes according to plan—and the last-second abort of the first launch attempt on Saturday reminds us it might not—Dragon will become the first commercially built vehicle to berth with and carry cargo to the ISS. So why is Musk profusely thanking the space agency that many believe he is working to privatize out of existence?

In reality, Dragon’s mission is not a libertarian adventure. Rather, it is the result of a deeply collaborative effort between SpaceX and NASA that could change the way we go to space, just like past public-private partnerships that gave us railroads and commercial air travel.

When it became clear during the Bush Administration that the space shuttle program was coming to an end, NASA had to figure out how to transport cargo and humans to the ISS, which wasn’t going anywhere. The technology needed to go to low Earth orbit is firmly established and, according to Mike Horkachuk, a NASA project executive working with SpaceX, the private sector was ready to step up. In 2006, NASA began actively investing in private spaceflight companies through a program called Commercial Orbital Transportation Services.

Greg Autry, an economist at UC Irvine’s Merage School of Business researching the development of the commercial spaceflight industry, draws a parallel between those investments and the U.S. government’s early support of the railroad and the aviation industry. In both cases, he says, it was the government’s aggressive investment in infrastructure that laid the foundation for private companies to succeed.

Today, both SpaceX and a company called Orbital Sciences Corporation have COTS contracts to develop the ability to carry cargo to and from the ISS. At the same time, seven companies (including SpaceX) are competing to eventually take astronauts there under the Commercial Crew Program. While NASA has been contracting with companies like Boeing and Lockheed Martin for decades, the agency’s agreements with its newer partners represent a sea change in the way it works with the private sector.

Rather than the traditional cost-plus model, in which companies are reimbursed the cost of a project plus an additional amount that guarantees them a profit, SpaceX and Orbital are working under newly established Space Act Agreements, in which NASA pays increments of a fixed price once the companies accomplish previously agreed upon milestones.

“We’re only paid for what we achieve,” SpaceX spokesperson Kirstin Brost Grantham says. “And if we don’t accomplish something, we don’t get paid for it.”

To this point, SpaceX has completed 37 out of the 40 milestones in its cargo development contract and has received $381 million out of a total possible $396 million from NASA, with even more government funding coming from the newer Commercial Crew Program.

Another unique aspect of the Space Act Agreements is they leave spacecraft design almost entirely in the hands of private companies. “Once the Space Act is awarded, we [at NASA] don’t go in and tell them, you’re not doing that right or you’re not meeting our requirements,” says Jon Cowart, the SpaceX Partner Manager for the Commercial Crew Program.

SpaceX and other companies can and do ask for guidance from NASA engineers, but they aren’t building to any pre-established design specifications. They are largely left to their own devices to figure out how to best achieve the agreed upon milestones. This encourages innovation, reduces NASA’s notorious tendency to micromanage, and, above all, saves money. A NASA analysis concluded that SpaceX was able to build its Falcon 9 rocket for about one-third of what the agency would have spent on a similar project under its traditional model.

According to Autry, Space Act Agreements have been a huge financial boon for the commercial spaceflight industry. SpaceX in particular, he says, has been able to “really leapfrog ahead of where they would have been if they had tried to do this in a purely commercial environment.”

Money is not the only reason private spaceflight companies are clamoring for government support. Partnering with NASA is “a great source of legitimacy” for an industry that still smacks of science fiction, Autry says. That legitimacy is key to attracting other customers as well as more traditional investors from Wall Street, investment banks, and hedge funds. In addition, working with NASA helps SpaceX navigate a complicated regulatory environment, which will be especially important when the safety of its eventual passengers becomes an issue.

What’s in it for NASA? Cowart points out that after 50 years of successful missions, low Earth orbit is “no longer a real frontier.” Making transportation to and from the ISS the responsibility of private companies “is supposed to free us up to go do the big things—to go to the asteroids, to go to Mars, to develop the heavy lifters.” Indeed, everyone I talked to agreed that NASA’s job should be to push the boundaries of space travel, with private companies following behind when those missions eventually become routine. Even SpaceX’s Brost Grantham says, “There will always be a need in space exploration for the government to step in where there is no apparent profit and where the things need to be done for the common good.”

The next few years will be difficult ones for NASA; budgets are expected to shrink across government science programs, and it remains an open question if the agency will be able to scare up enough funds for the exploratory missions Cowart talks about. Nonetheless, NASA is adamant that using its limited resources to jumpstart the commercial spaceflight industry is a worthwhile investment.

“It is absolutely, beyond a shadow of a doubt the right thing for us to be doing, helping these guys out,” says Cowart, who compares the youthful energy and excitement of the SpaceX team to the legendary Mercury and Gemini programs. “It’s going to pay huge dividends, because your kids and grandkids are going to fly on spacecraft that had their beginnings in what we’re doing right now.”